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PayPal’s Recent Tumble Makes the Stock a Buy, Analyst Says

August 20, 2019

Look past the recent tumble in PayPal Holdings stock, and “the longer-term outlook for the firm looks as healthy as ever,” Rosenblatt SecuritiesKenneth Hill said in a note to clients. He initiated coverage on the digital-payments company on Tuesday with a Buy rating.

Hill also initiated coverage on Square (ticker: SQ), a rival mobile-payments company, which has also been beaten down recently. He gives it a Neutral rating.

The back story. PayPal shares (PYPL) have dropped almost 11% since the company released second-quarter earnings on July 24 that surpassed Wall Street’s expectations for both earnings and revenue but lowered its full-year revenue guidance. The broader S&P 500 index is down 3.3% over the same period.

PayPal now expects to bring in between revenue of $17.6 billion and $17.8 billion this year, down from the previous guidance of $17.85 billion to $18.1 billion. The new, lower range is far below the consensus of $17.92 billion ahead of the second quarter.

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